The US unemployment rate has risen to a 26-year high of 8.5 per cent as employers make deep payroll cuts, bringing the number of jobs lost since the economic slump began to five million.
Official figures from the United States Labour Department showed that the rate of unemployment rose 0.4 percentage points in March as 663,000 jobs were shed. Economists said the report provided few fragments of hope. The Government revised January figures downwards to show job losses of 741,000, making that month the worst for employment since October, 1949.
While experts have spotted the first indications of improvement in the US housing market and in consumer confidence, the chief US economist at IHS Global Insight, Nigel Gault, said, ''This certainly tells us that any green shoots people have been looking for haven't shown up yet in the labour market.''
Early measures of recovery, such as weekly working hours and temporary employment, continue to fall. Jobs were lost in all categories except health care and education, with 161,000 positions disappearing in manufacturing, 126,000 in construction and 133,000 in professional and business services.
The numbers took the steam out of a recent rally on Wall Street, where the Dow Jones industrial average was down 10 points to 7967 by midday.
Since the economic downturn began, the number of jobs lost in the US has reached 5.1 million, the largest decline since troops were demobilised at the end of World WarII. Analysts believe that the unemployment rate, already at its highest since 1983, is likely to peak in double figures.
The chief economist at Mizuho Securities in New York, Steven Ricchiuto, said, ''We're at a record high in joblessness. The question is, how much higher can we go? I would not be surprised to see us get to 10 per cent or 11 per cent.''
In Detroit, the struggling car makers General Motors and Chrysler, which have already shed tens of thousands of workers, have warned that they will have to shut more factories and trim their payrolls to satisfy viability goals set by the Obama Administration.
The stationery company 3M, announced 1200 redundancies last week and the health-care supplier Cardinal said it was cutting 1300 positions.
A professor of business at the University of Maryland, Peter Morici, said the rate of joblessness could already be close to 11 per cent if people ''discouraged'' from the labour force were included, for example, part-time workers unable to find full-time jobs and stay-at-home parents who would rather be employed.
In another sign of hardship, business activity in the services sector shrank for a sixth successive month in March.
The Institute for Supply Management's index dropped from 41.6 to 40.8, suggesting that orders and inventories continued to weaken.
A jump in home purchases fuelled fragile sentiment that the economy was at least deteriorating at a slower pace, if not bottoming.
Retail sales are slightly improving and the corporate debt market is beginning to thaw. Enlivened by the Administration's $787billion ($A1.1trillion) stimulus package and by the US Treasury's latest plan to clean up banks' toxic assets, the blue-chip Dow Jones index has rallied 20 per cent since March 10.
But the rise in unemployment proved a sign of more pain to come in towns and cities across the US.
A senior economist at the Bank of Tokyo-Mitsubishi in New York, Chris Rupkey, said, ''This is a full-blown recession, with the job losses coming fast and furious.'' Guardian
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